Community Pharmacy has new purpose and lifespan thanks to: Coronavirus?
- Jonathan Jacobs
With more than 90% of the U.S. population located within 5 miles of a pharmacy, there is no question that the need for pharmacists will continue to grow, no matter what the future holds.
It’s time that we begin moving past the great response Community Pharmacy has had to the Coronavirus (did you ever doubt?) and begin solidifying why Independent Pharmacy must remain a community stronghold of Truth, Justice, and the American Way! The PBM’s have dinged Community Pharmacies so much that many have sought to merge, sell or just plain close. Independents need a booster shot like we all need a vaccination! Allowing ALL pharmacies including Independents to begin Coronavirus testing and eventually vaccinations for this and all communicable diseases helps ease the pain … a little!
Truth is Independent pharmacy has taken it on the chin for many, many- years and the reality is that what once was a great way to earn a living and run a family business is no longer a sure thing! PBM’s and disruptive and hurtful DIR fee’s continue to tear away at the fiber of the Community Pharmacy. Store owners large and small have sold, contracted, or completely closed their operations (often multi-store operations) in-order to stop the losses and insanity. I’ve recently spoken to pharmacists who buy and sell stores just to look for exclusive and one-time deals in any arena of retail pharmacy a particular store may have in order to justify the cost of purchasing a pharmacy operation in the first place. Large corporations sponsoring the insurance plans employ PBM’s that claw back countless dollars only to share them with the sponsors of the plan. This is nearly criminal but largely unreported and also unheard of! The average pharmacy earns $4.35 net profit per prescription processed. NCPA no longer publicly reports gross margins on prescription vs. non-prescription sales. However, they estimate that in 2018, gross margins on prescription sales were 21.0%. That is essentially unchanged from the 2017 figure. As you can see in the chart below, prescription gross margin figures have declined, from 22.0% in 2014.
In 2018, average per-prescription revenues in the NCPA sample decreased to $55.13, comparable to the $55.15 per prescription figure in 2017. Combined with the small increase in gross margin, gross profit dollars per prescription increased by 0.5%, from $11.53 per prescription in 2017 to $11.60 per prescription in 2018. This increase was probably not statistically significant. In the last year and a half plus since this study DIR Fee’s have additionally lowered Margins.
When at one time the Community Pharmacy was perhaps the mainstay of the small town and/or county. Chain pharmacy and mail order have taken a large chunk of patient freedom or pharmacy access if you will away from the patients and their stores of choice. MTM, Med-Synch, and other additional programs or Value-added services pharmacies have been forced to add just to “keep-up” with the latest trends and chain moves all cost money and thus reduce your operating profit. Chain Pharmacy has implemented cleaver tricks like the cessation of cigarette sales and lotto tickets in order to guilt or force independent pharmacies to make the same like changes. The reality is that CVS-Caremark implemented this change knowing that it would hurt independents and force store closures. Relentless DIR-fee’s imposed by abusive PBM’s have additionally clawed back profits on specific drugs and therapies making it impossible to turn a reliable profit further reducing independent store owners from successfully reinvesting their profits into much needed store and technology upgrades. Patients now have real issues in rural AND urban America with “Pharmacy Access”. The Community (Independent) Pharmacy is tired of being ‘under attack’!
The American Way
Clearly its time for Pharmacies, their buying groups and associations and all rph’s and pharmacy technicians to unite for a cause so near and dear to us all…Independent Pharmacy! Their survival and revival is at a tipping point! If the general-public now finally realizes how vital the community pharmacy is and always will be when will Uncle Sam follow? Congress and State level legislators need to pass meaningful bills curtailing the PBM’s overall influence on prescription price gauging, supply chain (distribution), and doctor visits. When the cost of prescriptions make it prohibitive to pay ones’ housing bills we have a national crisis. Seniors are making decisions between vital life preserving medications and…….food! Healthcare and specifically your medications should all be based on a min/max income threshold supported by the state and or federal government guaranteeing both cost and reimbursement levels to pharmacists. This protects the general public and those that dispense medications (pharmacies) price or cost certainty. All DIR fee’s must be posted on-line and in print to the general-public with easy to follow performance/business metrics to account for both Direct and Indirect Renumeration. Meaning- It should be easy for a pharmacy to tell if it is being compliant or within the rules to avoid claw-backs…as well as performing well enough to qualify for additional compensation from said third party auditors. The next ‘Public crisis’ could be just around the corner. Let’s get rid of the Transparency in Community and Independent Pharmacy for good!
We at Point of Care Systems are concerned for everyone’s health and well- being. We urge you all to maintain social distancing and being compliant with your local rules and regulations to stem the virus and end this pandemic. If you would like to see a demonstration of our new and unique pharmacy management software and POS system kindly contact us at email@example.com or call me at 631-902-8250 to begin a discussion.
National Sales Manager at Point of Care Systems
We have additional articles related to the Covid-19 Pandemic and much more below:
Best Practices For Pharmacy Retailers – Part I: From Absentee Owner to Front-Line Employee
Tools For Your Business In The Work From Home Days Of Coronavirus